(China Daily)
Updated: 2008-01-04 09:07

China's main stock index rose to a six-week closing high yesterday and turnover expanded to levels last seen near the market's peak, as second-tier industrial shares soared while financials stayed weak.

The Shanghai Composite Index ended up 0.89 percent at 5319.861 points, less than two points off its intra-day high. It was the highest close since November 15.

Turnover in Shanghai A shares rose to a heavy 169.6 billion yuan ($23.33 billion), the highest level since mid-October, when the index hit its all-time peak of 6124 points.

Wednesday's turnover was 132.4 billion yuan.

"Sentiment is strong and investors are buying a wide range of shares," said Zhou Lin, analyst at Huatai Securities. He added that while bank shares were still being hurt by expectations of more monetary tightening in coming months, banks' profit outlook remained generally positive given the booming economy.

The index has neared its 60-day moving average, now at 5354 points, which some traders consider strong technical resistance that will not break in the short term. Investors may therefore continue to focus on second- and third-tier stocks instead of blue chips, they said.

But analyst Zhang Yanbin at Zheshang Securities said blue chips were also showing signs of rallying. PetroChina, the biggest stock, rose 1.64 percent to 31.08 yuan.

　　

　　

"If PetroChina can climb above 33 yuan, then the index may target its record high. With yesterday's strong turnover and sentiment, the 60-day average should not be a problem," he said.

Steel shares surged yesterday afternoon, led by Baoshan Iron and Steel, up 5.50 percent to 18.22 yuan.

Hang Seng slides

Hong Kong blue chips shed 2.44 percent yesterday, extending recent losses on resurgent fears of a US recession, but gold stocks glittered after prices for the precious metal touched an all-time high.

The benchmark Hang Seng Index ended at 26887.28 on mainboard turnover of HK$90.14 billion, against HK$75.87 billion on Wednesday.

The China Enterprises Index of Hong Kong-listed mainland Chinese companies fell 3.4 percent to 15464.66.

Analysts expect Hong Kong's market to wander lower in coming days as cautious investors cash out.

Chinese gold producers bucked the weak trend after prices steadied below an all-time high of $861 an ounce. Zhaojin Mining jumped 5 percent, Zijin Mining gained 1.8 percent and Sino Gold soared 11.25 percent.

Agencies